THEORY OF STATE

BUDGETS
W YRLO B. DELA CRUZ, LPT
BUGS│BUJMRIGD
A. THEORY OF BUDGET APPLICATION FOR SUSTAINABLE DEVELOPMENT
B. APPROACHES AND TECHNIQUES IN BUDGETING: THE PHILIPPINES
C. ORGANIZATION FOR PHILIPPINE BUDGETING
Definition of Budget
Kohler defines the budget as a financial plan which serves as the pattern for and
a control over future operations (hence any estimates of future costs) and as a
systematic plan for the utilization of manpower material or other resources.
Two major management functions are clear in this definition:
(1) A budget may serve as a plan indicating requirements of certain factors (e.g.
cash, productivity) at some future date.
(2) A budget may serve as a control, containing criteria of costs or performance
which will be compared with actual data on operations, thus facilitating
evaluations, and possibly encouraging or even enforcing some measures of
efficiency.
Theory of Budget Application for
Sustainable Development
Role in the Political Process
Impact of national economy
Instrument of Administrative control
APPROACHES AND TECHNIQUES IN
BUDGETING: THE PHILIPPINES
Government Budgeting
◦ is the process of allocating financial resources for intended programs,
projects, services, and activities to empower the organization to carry out
stated goals and objectives (Briones, 1996)
◦ entails management of government expenditures that will create impact
from the production and deliver of goods and services while supporting a
healthy fiscal position.
Relevance
Government can prioritize and put into action its plans,
programs and policies, within the constraint of its financial
capability as dictated by economic conditions
Approaches in the Philippines
Line Item Budgeting (LIB)
Performance Budgeting (PB)
Planning, Programing Budgeting System (PPBS)
Zero Based Budgeting (ZBB)
Line Item Budgeting
-it is also called as ‘item expenditure approach’
-Manifestation of process budgetary ‘incremental fragmented, non-
programatic and sequential’
-During its legislation or authorization phase, the legislature wielded
so much influence on agencies of their choice
-The lawmakers were able to pinpoint ‘objects of future choice’
especially those referring to new position
Performance Budgeting
-Activity or functional budgeting
-objects of expenditures are deemed as significant factors in relation to what
they used for not in relation to their specific character
-the budget, acoounting and auditing modernization project was launched in
1954 in collaboration with US management; introduced as package reform
-Budgetary improvements represented an attempt to initiate requisite changes
in an area relatively neglected in the past.
-reforms to help government cope with social, economic, and political problems
Planning Programming Budgeting System
-answer to the need for an economic allocation of resources and the undertaking of government
policy, program analysis, and cost utility analysis to improve the policy decision process of
government
-the scheme requires agency managers to identify program objectives, develop measuring
program output, calculate total program costs over the long-run, prepare detailed multi-year
program and financial plans, and analyse the costs and benefits of alternative program designs.

-the system provide a strong linkage between planning and budgeting

-Martial law in Sept. 1972, PD. No. 1- reorganization of the entire
government system-formulates short term and long term
development plans and to monitor
-Creation of NEDA (National Economic and Development Authority)
-PAGBA (Philippine Association f Government Budget Administration)
and CESDP (Career Executive Service Development Program) devoted
several conferences to discuss its merits
Zero Based Budgeting
-an operating , planning, and budgeting method which requires
every agency manager to justify his entire budget systems in detail
and transfers the burden of proof to each manager why he should
spend any money.
-it underscores the analysis of all budgetary expenditures to answer
effectiveness in achieving organizational goals.
-yearly analysis, evaluation, and justification of each activity,
program or project starting from a ‘zero’ performance level
-a budget based on need not want
ORGANIZATION FOR PHILLIPINE
BUDGETING
Philippine Budgeting :
A.Budget Formulation Process
B.Role of Congress in Approving Budget
Special Characteristics
1. A commitment to Fiscal Discipline
2. Tax Compliance and Corruption
3. Subsidies: government owned and controlled corporations
4. The Development Budget Co-ordinating Committee.
5. The national planning function
6. Unprogrammed funds and special purpose funds
Thank you!!